COLUMN ONE : A Critical Moment in Time : Offices of the nation’s preeminent news magazine buzz with change and internal dissension. Its editors ponder a new character and direction.

During a story meeting at Time magazine, one of the newsweekly’s most valued journalists asked a question recently that revealed the depth of soul searching and fear today inside this uniquely American media institution.

“If I stay here, if I elect not to leave,” the journalist asked out loud, “what kind of magazine am I staying here to produce?”

Time, the nation’s largest and most influential newsweekly, is in the process of eliminating roughly a quarter of its correspondents, writers and researchers. At the same time, editors are pondering a design change that could mean a new character and direction for the magazine that helped invent modern interpretive journalism.

Time, the magazine that in some ways came to epitomize the American Century, is at a critical moment. It is being buffeted by shrinking advertising and challenged by an increasingly changing American appetite for information. And now it is no longer the spiritual core of its corporate parent. Two years ago, the merger that produced Time-Warner Inc. gave birth to a media giant focused on entertainment as well as communication.

Time Managing Editor Henry Muller says the magazine is simply evolving: “I much prefer to operate the way Honda does, which is to say is there a better way to do this, than . . . to be arrogant and think the readers will always be happy.”

Even before the merger, Time was moving away from its classic function of explaining last week’s news. Like its competitors, Time now devotes most of its pages to features, trends, commentary and looking ahead. “We had to have the courage not to be a magazine of record,” says Muller.

But then came one of the worst advertising recessions in memory, and then the Time-Warner Communications merger, which initially saddled the combined companies with $11 billion in debt.

Now the changes at Time are being influenced--not so much by Time Warner’s heavy debt--as by the company’s values, profit targets, and operating philosophy. Once a magazine company run by journalists, it is now a diverse empire dominated by entertainment executives, led in particular by flamboyant former Warner Chairman Steven J. Ross., to whom the magazines and Time in particular are not the jewel in the crown.

Managing Editor Muller candidly admits the layoffs asked of Time are twice what he thinks he can absorb without challenging the magazine’s quality.

Inside Time, morale has been damaged to the point that the antipathy toward the company’s top executive stretches to the upper levels of the magazine.

Said one member of senior management: “I work for Time, not Time Warner.” Then he referred to Chairman Ross with an obscenity.

What is not clear now is the impact of the changes Time is contemplating.

“One version of this is that the only way to save Time is to redesign,” says one star Time correspondent. “The other is (the layoffs and planned redesign are) New Coke. But in our case, old Coke wouldn’t still be on the shelves. It would disappear.”

Such concern is overwrought, says Muller: “The taste of the Coke has (already) changed, and the readers seem to like it. The question we are looking at now is the receptacle.”

To understand all this, it is useful to recall the Olympian institution that Henry Robinson Luce invented in 1923 and presided over until 1967. The son of China missionaries, Luce ruled Time as not so much a magazine as a Calvinist cause, a personal Republican vision of American destiny, operated with a mixture of Ivy League arrogance, Midwestern naivete and entrepreneurial genius.

Part of its secret was that Time catered to an American middle class that was becoming better educated, at a time when radio was expanding American curiosities. Before Luce, news was mostly politics and crime. Afterward, journalism explored the social fabric--even something called behavior.

And as Time’s power grew--author David Halberstam called Time of the 1940s and ‘50s “simply the most powerful and influential national organ in the country,”--so did Luce’s efforts to use it.

In 1952, for example, Luce played a key role in electing Dwight D. Eisenhower President, repeatedly flying to Europe to persuade Eisenhower to run, organizing Eisenhower’s early campaign and then devoting Time’s coverage to defeating his rivals.

After Luce’s death in 1967, Time Managing Editor Henry A. Grunwald devoted much of the next decade to making the magazine, as one top executive put it, more “intellectually honest.”

When Ray Cave became managing editor in 1978, his primary responsibility, among other changes he oversaw, was to bring Time into the age of color. During his seven-year tenure, Time went from four pages of color a week to 50.

Throughout this period skeptics predicted that the speed and reach of television would make the seven-day cycle of newsweeklies obsolete. But in fact the magazines discovered that when events were most heavily televised their own sales surged--even in the age of 24-hour news. For those who read newsweeklies, Newsweek President and Editor-in-Chief Richard M. Smith says, “TV whets the appetite.”

But in the 1980s, the challenge came from elsewhere. In 1980, the New York Times launched its national edition; in 1983 USA Today began, and in the mid-1980s the Wall Street Journal added new sections in an effort to strengthen its national appeal.

The nature of newspaper coverage also changed. After the arrival of CNN in 1980 broke the network monopoly over out-of-town news, local stations began getting up-to-the-minute network footage from around the world. Assuming that their readers increasingly were familiar with the news, newspaper coverage took on an even more analytical approach, looking more to the future, trying to answer questions editors thought television had provoked. It was, in effect, the traditional newsweekly role.

The effect, particularly outside key major cities, was powerful. “Ten years ago . . . for national and international news . . . you read your local paper and Time and Newsweek,” said Time general manager Ellen Fairbanks Dealy. “In the last nine years or so that has changed.”

At Time, the biggest and richest newsweekly, the signs did not show immediately. Profits continued to swell. In the first half of the decade, the magazine boosted circulation by 600,000 to 4.6 million.

But by 1985 Time found itself straining. Many readers were not all that loyal. To keep them, Time had to give away electronic gadgetry and luggage in promotions. The cost of maintaining circulation was eating into profits.

Then, after two years of trying to cut costs under interim managing editor Jason McManus, Time set on a course of dramatic change in 1987 when it promoted Henry Muller, a baby boomer at age 40, from chief of correspondents to managing editor.

Muller moved with his family from Geneva, Switzerland, to San Francisco at age 6. Today, Muller strikes some as reserved, almost European in manner.

But Muller’s polite reserve could also be the sign, say others, of an extraordinarily deft office politician. When Time Warner appointed a highly secretive corporate commission to explore revamping Time to become more profitable, Muller had his own staff quietly move to anticipate the commission’s report by launching its own proposed redesign.

And others praise Muller’s modernism, citing such examples as his pushing the magazine, before it was fashionable, to recognize the growing importance of environmentalism and women’s issues.

Shortly after Muller took over in 1987, he began to significantly alter Time’s content.

At the time, the managing editor recalls now, roughly two-thirds of the magazine fulfilled the classic newsweekly mission of “summarizing the news,” Muller says. Only a third was “going beyond the news” with analysis and features, or the traditional coverage of culture and entertainment.

In the past four years, “We’ve tried to invert those proportions,” Muller says. The goal: to take Time on a tack away from competition with newspapers and more into waters where it can retain a distinct appeal to upscale readers.

The magazine introduced more writers with individual points of view. Time also engaged in what some insiders call a “mini-redesign,” adding boxes and graphics to make the magazine easier to read, though some skeptics charged it seemed to cater to people who only browsed the magazine but would not read it.

Today, a typical Time story might be a long analytical package: an August cover on “Was the War Worth It” in Iraq, a September piece on “Is The CIA Obsolete.”

It might be investigative packages: a May cover on “Scientology,” a July cover on “The World’s Sleaziest Bank.”

Or it might involve social trends: “The Simple Life,” an April cover about escaping from the city; “Evil,” a June cover on why bad things happen; “The Colorado,” a July cover about the fight for the river.

Muller’s editorial changes also fit with another of his primary responsibilities: cutting costs.

By the late 1980s, advertising was moving into a nationwide recession. National media were affected the most, particularly magazines. National advertising had been shrinking as a percentage of all advertising since the recession of 1982. The ad business, the industry slowly concluded, was becoming more local.

At Time, budget pressures increased because editorial costs were rising at 10% a year between 1978 and 1985, according to Time Executive Editor Richard Duncan, who holds the No. 2 news job.

Muller decided to dismantle much of Time’s famed writing and reporting system. Under the structure, designed by founder Luce so that the entire magazine read as if written by a single voice, correspondents sent lengthy reports to New York, where a separate team of writers molded them into prose.

“Henry (Muller) looked at the magazine and said: ‘Boy, it is all process, too many stages, a magazine organized and geared to produce the news digest,’ ” said Duncan. “The magazine Henry wanted to produce was going to cost less, going to need fewer people and have more personalities, more voices.”

Across town, Newsweek, smaller and more vulnerable, already had gone through some similar changes. In search of readers, it began consciously tracking baby boomers, looking closely at domestic social trends and encouraging writers to take risks and assume strong points of view. The magazine took on an edge, an attitude, and often a tone of irreverence.

“We take what we do seriously but we don’t take ourselves too seriously,” says Smith, Newsweek’s president.

U.S. News & World Report, under the new ownership of real estate developer Mortimer Zuckerman, was making its own major transition--moving more toward investigative and original reporting, plus adding more emphasis on “news you can use” and livelier writing.

Some critics find the new approach troubling. Newsweek’s tone, said one prominent newsweekly veteran, is “Look Ma, I’m writing. It’s more provocative . . . more essayish.” and even some who flourish at the newsweeklies worry there is less emphasis at all three on reporting.

But the approaches seem to be working. In the last five years Newsweek steadily built circulation without spending too much on gifts and premiums to do so. Readership is now at an all-time high of 3.2 million. U.S. News is holding steady at about 2.3 million. Time is now at 4 million.

It would be hard to conclude this all means there is less objectivity in the newsweeklies--Time and its brethren were not traditionally grounded in that notion anyway.

But one risk in the new approach is that it gives more weight to interpreting events and less to the events themselves. Before an event is fully understood, the press is speculating about its effect on the future.

“It is hard enough to know what has happened,” said one Time veteran who asked for anonymity, “without trying to predict what will happen.”

Now those concerns are finding a lightning rod in Time’s proposed redesign.

The prototypes are still rough, a work in progress. But according to sources who have seen it, the proposed new version of Time would offer only a short summary of the week’s news in the front and a section in the back for such subjects as the arts, entertainment, culture, medicine, the environment--plus perhaps a separate area for reviews.

The center of the magazine is the point of most contention. It will be for longer stories, the best writers, essays, features, investigations. The precise nature is unclear, in part because it is designed to be flexible, and in part because it is in dispute.

Time’s staff, which contends that the strength of any magazine is in its reporting, worries that the layoffs and the redesign at Time will put too much emphasis on the cleverness of writers in New York and not enough on old fashioned shoe leather out in the world.

Says Maynard Parker, editor of Newsweek: “There is a risk that they (at Time) have underestimated the tremendous vitality of news magazines.”

Time’s Managing Editor Muller reminds that “the redesign is not a forgone conclusion,” and insists that in any case, the change is “not predominantly one of content,” only design. Still he agrees with his editors that the new look will suggest a different feel and a different way of writing.

Until this summer, much of this was going on quietly. The prototypes were closely held. Time’s corporate Editor-in-Chief Jason McManus had seen them only once.

And Muller was cutting the staff through attrition. In the four years, he cut the staff 13% from 416 to 360.

But the advertising recession continued to worsen. And early this summer the company told all its magazines that they had to make what analysts estimate was $30 million in cuts, roughly a third of which would come at Time.

Muller and his editors managed to make half the cuts by slashing overhead. But the other half had to come in layoffs, 39 of them journalists.

It was more than editors at Time felt was workable.

“Twenty would have been tolerable,” Muller said. “The other 20 is what I’m dismayed about.”

The cuts are reducing Time’s overall staff to about 300, still more than Newsweek’s 275 or U.S. News’ 200. But the number of Time correspondents in foreign and domestic bureaus, 56, will actually be smaller than the number at Newsweek, 66.

Time officials dispute the idea that the layoffs and cost-cutting are the result of the merger with Warner and the company’s debt, which now amounts to $8.8-billion.

“We would be in deeper soup in the market without the merger,” Muller argues, since the company is now diversified into businesses not so dependent on advertising.

Most Wall Street analysts agree: “The cash flow performance is better with Warner in there than it would be with the old Time Inc.,” said Smith Barney brokerage analyst John Reidy.

And cutting $30 million from the magazine group, said analysts, doesn’t help much when trying to pay off $8.8 billion. The debt, originally $11 billion when the merger was completed, has been whittled by issuing stock and could fall further as a result of new international joint ventures.

But what is identifiable as a result of the merger, executives within Time Warner acknowledge, is that the culture and values of the company have changed.

Although Time Inc.’s Nicholas J. Nicholas Jr. is technically co-chairman with Warner head Ross, the Warner people are in the ascendancy, insiders and Wall Street analysts agree.

From a mathematical standpoint, magazine journalism shrank from just under half of Time’s revenues before the merger to just 17% today.

More important, the emotional center of the company has shifted. Time magazine had stopped being the financial pump of the company by 1935, when Life was launched and immediately became more successful. But for Henry Luce and his proteges, Time was the source of power, and prestige, the thing that made them not a company so much as a cultural and political and intellectual institution.

“Within the organization, the men who were more ambitious in the corporate sense, the men who wanted to rise in the company, went to work there” at Time, Halberstam wrote in the “Powers that Be.”

The recent move of Robert L. Miller from publisher of Time to the helm of the much lower profile but lucrative Sunset, Parenting, In Health and Hippocrates magazines is widely perceived as one sign, say insiders, that business careers at Time Warner are not necessarily best made at Time.

Inside the company, people also saw it as significant that two older Time properties, Sports Illustrated and Time, took the brunt of the cost-cutting, while projects like Entertainment Weekly, a new magazine, had no reductions.

Suspicion of top management’s intentions is also fed by the news that in the midst of the cutbacks, co-chairman Ross earned $78 million in stock options, bonuses, and salary last year, mostly from the buyout of his Warner stock after the merger.

People inside Time magazine feel they are trying to fight against the possibility of a downgraded Time.

“There is still a large spoken ethic that we need a quality Time magazine,” says one high ranking executive. “It might take a miracle to put out as good a magazine as we did before. We expect a miracle.”

Then, as if in an afterthought, this official said, “They keep at us, they are going to hear a little yelling.”